Title: June Sparks Impressive Gains for S&P 500 Investors as Carnival Takes the Lead
Introduction:
The S&P 500 has defied expectations, showcasing an impressive performance in June. Investors who made savvy choices have reaped significant benefits, with the market’s top-performing stock, Carnival (CCL), contributing to remarkable returns. This surprising surge raises hopes for a stellar second half of the year, particularly given the historical trends associated with strong first-half performances.
Article:
June marked an exceptional month for the S&P 500, with investors witnessing gains that defied the norm. According to an analysis by Investor’s Business Daily, if one had invested $10,000 in January and reinvested in the best-performing stock from each subsequent month in 2023, including Carnival (CCL) in June, they would now have $69,878. This remarkable six-month gain of nearly 600% far surpasses the S&P 500’s year-to-date increase of just 15.9%. Those who invested the same amount directly in the S&P 500 would have a mere $11,590, amounting to a gain of just $1,590.
Investor optimism has been further bolstered by the impressive rebound in technology stocks, particularly those associated with artificial intelligence (AI). The hope amongst investors is that June’s success serves as a catalyst for a strong second half of the year.
Experts from Bespoke Investment Group suggest that historically, when the S&P 500 performs exceptionally well (10%+ gain) in the first half of the year, subsequent months such as July, the third quarter, and the overall second half tend to outperform the historical average.
The performance of the S&P 500 in June itself was noteworthy. Typically, June has not been a favorable month for the index, as indicated by the “Stock Trader’s Almanac.” However, in contrast to the 0.1% average gain historically, June 2023 witnessed a significant increase of 5.2%. The month of May is typically considered more favorable, ranking as the ninth best month for returns.
Taking the spotlight as the top S&P 500 stock in June was Carnival, the cruise operator, whose stock jumped an impressive 67.7%. Investors anticipate a turnaround in the company’s fundamentals, as Carnival is expected to post a profit of 77 cents a share for the quarter ending in August. This would reverse the previous year’s loss of 58 cents a share, indicating a path towards profitability again in 2024.
The travel industry showcased strength in June, with Norwegian Cruise Line (NCLH), Delta Air Lines (DAL), and Royal Caribbean Cruises (RCL) securing positions within the top ten S&P 500 stocks. Norwegian experienced a 46.6% gain, followed by a 44.7% increase for Delta Air Lines, and a 28.1% rise for Royal Caribbean Cruises.
The twists and turns throughout the year highlight the challenge and potential rewards within the S&P 500 for investors. January saw a strong start, with the index surging 6.2%. Warner Bros. Discovery (WBD) emerged as a standout performer, gaining over 56% in just one month. However, February brought a pullback as fears of inflation resurfaced. Catalent (CTLT), a healthcare company, managed to gain 25.6% during that month.
Looking ahead, experts predict that the rally could continue following a robust June and first half of the year. Historically, July ranks as the fourth-best month for the S&P 500, while recent trends indicate even stronger performance. Over the past decade, July has seen average gains of 3.27% and positive returns 90% of the time, including uninterrupted increases for the last eight years.
Based on historical data from the past 75 years, a strong start to the year often translates to an equally strong second half. Research from Bespoke Investment Group highlights that the median second-half performance of the S&P 500 following a 10%+ gain in the first half is more than twice the median second-half performance for all years since 1945 (10.13% vs. 4.96%).
Conclusion:
Despite the fluctuations and challenges faced, the S&P 500 has proven to be a worthwhile investment for those who make informed decisions. June brought unexpected gains, with Carnival leading the way. As investors look towards the second half of the year, optimism remains high, based on historical trends and the potential for continued success.